Compare RD Rates – All Banks India 2026

Recurring Deposit Rate Comparison India 2026 — The Complete Guide for Monthly Savers

A Recurring Deposit is one of the most underappreciated savings tools in the Indian financial system. While everyone talks about SIPs and FDs, the RD sits quietly in between — offering the disciplined instalment structure of a SIP with the capital safety and guaranteed returns of a fixed deposit. For salaried Indians who receive a fixed monthly income and want to build a corpus without worrying about market volatility, a recurring deposit at the right bank can be a genuinely powerful financial tool.

In 2026, with the RBI having cut the repo rate to 6.25% in February, RD rates are at an important crossroads. The highest rates are still available from Small Finance Banks — AU SFB at 8-8.5%, Ujjivan SFB at 7.75-8.25% — while public sector banks like SBI offer 6.5-7.1% and HDFC Bank offers 7-7.4%. This page gives you a comprehensive comparison of RD rates across all banks, helps you understand exactly how RD interest is calculated, explains the tax implications in plain language, and shows you when to choose an RD over a SIP or PPF.

How to Read the RD Comparison Table

The RD comparison table at the top of this page is sorted by the best available RD rate at each bank. Understanding each column helps you pick the right bank and tenure for your specific savings goal:

One important thing to understand about RD rates: they are typically 0.1-0.25% lower than the FD rate for the equivalent tenure at the same bank. This is because an RD is a growing deposit — in month 1, only the first instalment earns interest for the full tenure; in month 2, the second instalment earns interest for tenure minus 1 month; and so on. The effective average balance is roughly half the total deposits, which is why the bank pays slightly less than a lump sum FD.

How RD Interest Is Actually Calculated

This is something most people get wrong. They assume an RD of ₹5,000/month for 3 years at 7% will give them 7% on ₹1,80,000 (36 × ₹5,000 = ₹1,80,000). That is incorrect.

RD interest is calculated using the simple interest formula on each instalment for the period it remains in the RD. The formula banks use is:

Interest = P × r/400 × n(n+1)/2

Where P = monthly instalment, r = annual interest rate (%), n = number of instalments

For ₹5,000/month for 36 months at 7%:
Interest = 5,000 × 7/400 × 36(37)/2
Interest = 5,000 × 0.0175 × 666
Interest = ₹58,275 approximately

Total maturity amount = ₹1,80,000 + ₹58,275 = ₹2,38,275

The effective return on the total deposits (₹1,80,000) works out to approximately 6.49% simple interest, or about 3.6% on the final amount. This is why RD returns look lower than FD returns in simple comparisons — but that is an apples-to-oranges comparison since in an RD, you are investing monthly, not upfront.

Bank-by-Bank Analysis: RD Rates India April 2026

Small Finance Banks — Best RD Rates in 2026

AU Small Finance Bank leads the pack for RDs in 2026 with rates between 8% and 8.5% depending on tenure. AU SFB, which recently converted to a universal bank licence application, has been offering some of the most competitive RD rates in the market. Its 18-month RD at 8.5% is particularly attractive for medium-term goals.

Ujjivan Small Finance Bank offers 7.75-8.25% on its RDs, with special senior citizen rates going up to 8.75%. Equitas Small Finance Bank offers similar competitive rates. These SFBs are great for RD investors parking up to ₹5 lakh in total deposits at the bank (within the DICGC insurance limit).

Private Banks — Balancing Rate and Safety

HDFC Bank offers RD rates of 7-7.4% across tenures, which is competitive for a large private bank. ICICI Bank matches this at approximately 7-7.25%. Axis Bank is in the same range. For salaried investors who already have a salary account at these banks, the auto-debit facility for RD is seamless and the rates, while not the highest, are reliable.

Kotak Mahindra Bank's RD rates are slightly lower at 6.75-7%, but it offers an excellent mobile app experience. IndusInd Bank occasionally runs special RD offers at 7.5-7.75% — worth checking if you bank with them.

Public Sector Banks — Reliable and Widespread

SBI's RD rates range from 6.5% to 7.1% depending on tenure, mirroring its FD rate structure. Bank of Baroda, Canara Bank, and Punjab National Bank are in the 6.5-7% range. Post Office RD offers a flat 6.7% rate regardless of tenure — fully government backed, no DICGC limit concern, available at any post office across India.

For small-town and rural investors, or those who prefer physical branch banking, Post Office RD and SBI RD are the most accessible options with guaranteed safety and government backing.

Tips for Getting the Most from Your RD in 2026

1. Align the RD tenure with your goal date: The biggest advantage of an RD is its forced discipline — you cannot easily withdraw mid-way. So make sure the maturity date aligns with when you actually need the money. If you need money in 18 months, open an 18-month RD, not a 2-year or 1-year one.

2. Start early in the financial year: If you open an RD in April (start of financial year), the interest accrued in that year is lower and TDS impact is spread more evenly. An RD opened in January has 3 months of interest in the first year but may trip the TDS threshold in the second year.

3. Open multiple small RDs rather than one large one: Instead of one ₹10,000/month RD, consider two ₹5,000/month RDs at different banks. This gives you flexibility — if an emergency arises, you break one and keep the other. Breaking one large RD forfeits all the interest advantage.

4. Use auto-debit for RD instalments: All banks offer auto-debit from your savings account for RD instalments. Set this up for the 3rd-5th of each month — right after your salary credit. Missed instalments attract a penalty (typically ₹1-2 per ₹100 per month) and can cause the RD account to be closed or converted after several missed payments.

5. Check senior citizen rates: If you are 60 or above, or opening an RD for a retired parent, always apply for the senior citizen rate. Most banks require you to submit age proof and a specific request — it is not automatic. The 0.25-0.5% extra adds up significantly over 3-5 years.

6. Compare RD vs SIP for the same monthly instalment: For 5-year goals, always run the SIP vs RD comparison. On ₹10,000/month for 5 years: RD at 8% gives approximately ₹7.35 lakh maturity. SIP at 12% returns approximately ₹8.17 lakh but with market risk. The 11% extra from SIP comes with significantly higher volatility risk. For conservative short-to-medium term goals, RD wins.

Tax on RD Interest in India — 2026 Rules

RD interest is taxed exactly the same way as FD interest — fully as income under "Income from Other Sources," taxed at your applicable slab rate. There are no special exemptions, and you cannot claim 80C deduction on RD investments (unlike tax-saving FDs). Here is the complete picture:

TDS on RD Interest: Banks are required to deduct TDS at 10% when total interest (FD + RD combined at that bank) exceeds ₹40,000 per financial year (₹50,000 for senior citizens). Importantly, banks now aggregate FD and RD interest when calculating the TDS threshold — so if you have both FD and RD at SBI and combined interest exceeds ₹40,000, TDS kicks in on the excess.

Annual declaration required: RD interest accrues month by month, even though you receive the lump sum at maturity. The bank reports the annual accrued interest to the income tax department. You must declare this in your ITR every year, not just the maturity year. The bank's Form 26AS and Annual Information Statement (AIS) will show this.

Post Office RD is not exempt from tax: A common misconception is that Post Office RD is tax-free. It is not. Post Office RD interest is fully taxable. The only Post Office savings instrument with a tax exemption is PPF (Public Provident Fund), where both contributions (80C) and interest (EEE status) are exempt. Do not confuse the two.

Section 80TTA Deduction: This section provides a ₹10,000 deduction (₹50,000 for senior citizens under 80TTB) on interest from savings accounts, but it does NOT apply to RD or FD interest. RD interest is categorised under "Term Deposit" interest, not savings account interest.

RD vs SIP vs PPF vs FD — Which One Should You Choose?

The bottom line: For goals within 5 years where you cannot afford market risk — emergency fund building, annual vacation savings, home appliance fund — RD is the right choice. For goals beyond 5 years, a SIP in a diversified equity mutual fund will likely beat RD returns after tax, especially with the favorable LTCG tax treatment. PPF beats both for retirement planning, but requires 15-year patience.

Real-Life Scenario: Priya's RD Strategy in 2026

Priya is a 29-year-old marketing professional in Hyderabad earning ₹75,000/month take-home. She has three financial goals she wants to fund over the next 2-3 years:

• A Europe trip in 18 months: needs ₹2 lakh
• Down payment for a car in 2.5 years: needs ₹3 lakh
• Building a ₹6 month emergency fund over 2 years: needs ₹4.5 lakh

Priya's RD plan:

Total monthly RD commitment: ₹11,000 + ₹10,000 + ₹18,000 = ₹39,000 per month (52% of take-home, which is aggressive but feasible for a disciplined saver with low fixed expenses).

Priya's tax calculation: Her total RD interest over the period is approximately ₹83,600. She is in the 10% tax bracket (income ₹9L range under new regime). Tax on RD interest = approximately ₹8,360. Net after-tax gain = ₹75,240 — still excellent for a guaranteed, zero-risk investment.

The key lesson: Priya uses three separate RDs at three different banks (AU SFB, HDFC, SBI) for three different goals with three different maturities. This ensures that (a) each goal is mentally ring-fenced, (b) she does not break a wrong RD in an emergency, and (c) her deposits across any single bank stay below ₹5 lakh for DICGC coverage.